In response to concerns over complexity in sustainability regulation, the European Commission has introduced the Omnibus Simplification Package, a proposal aimed at streamlining corporate sustainability reporting while maintaining the EU’s sustainability goals.
Discussions surrounding the Omnibus Package have already generated considerable attention, especially after a first draft was released by the European Commission on February 26, 2025.
The European Commission’s Omnibus Simplification Package introduces amendments and clarifications to key sustainability regulations to streamline requirements and reduce administrative burdens.
By refining these frameworks, the Omnibus proposal seeks to eliminate redundancies, lower compliance costs, and create a more efficient reporting system. The Commission has outlined an explicit goal of reducing reporting burdens by 25% for large companies and 35% for SMEs, reflecting a broader effort to simplify sustainability disclosures while maintaining the EU’s ambitious environmental objectives.
Proposed amendments to the EU Taxonomy, CSRD, CSDDD and CBAM
These proposed changes are aimed at simplifying the regulations and reducing the reporting burden for businesses.
EU Taxonomy
- Voluntary Taxonomy Reporting: The proposal suggests allowing large companies (with annual turnover below EUR 450 million) to voluntarily report their progress towards sustainability goals, acknowledging their efforts toward alignment with the Taxonomy.
- Partial Alignment Reporting: It is proposed that businesses under EUR 450 million turnover be permitted to report on activities that meet some, but not all, of the Taxonomy’s technical criteria, making it easier for them to demonstrate their sustainability efforts.
- Flexibility in Reporting: The proposal introduces more flexibility in how companies in scope report their alignment with the Taxonomy, potentially reducing the administrative burden.
- Simplified Reporting Templates: The proposal calls for simplified reporting templates by removing certain detailed requirements. This includes no longer needing to separately report activities aligning with different Taxonomy objectives, and a combined approach for reporting on DNSH (Do No Significant Harm) and nuclear/fossil gas activities.
- Clarification on Appendix C: The amendments aim to clarify issues with Appendix C related to the application of exemptions from EU environmental laws that affect compliance with the Taxonomy criteria.
- Exclusion from Reporting: One of the proposed changes is to exempt companies with fewer than 1,000 employees or those with an annual turnover under EUR 450 million from the reporting requirements altogether.
Corporate Sustainability Reporting Directive (CSRD)
- Revision of Standards: The proposal suggests a revision of the first set of European Sustainability Reporting Standards (ESRS) to remove data points that are considered less important for general sustainability reporting, which could make reporting simpler and more focused.
- Delayed Reporting Dates: For companies in wave 2 (large companies) and wave 3(SMEs), the proposed changes suggest postponing the start of sustainability reporting until 1 January 2028, instead of 2026, allowing companies more time to prepare.
- Voluntary Reporting Standards: The proposal suggests that the Commission should adopt delegated acts to provide sustainability reporting standards for companies that are outside the scope of the CSRD, offering them the option to report on a voluntary basis.
- Value Chain Reporting: The proposed changes would specify that companies will not be required to obtain information from other businesses in their value chain with fewer than 1,000 employees, as long as those companies are only reporting voluntarily.
Corporate Sustainability Due Diligence Directive (CSDDD)
- Broader Harmonization: The proposal aims to extend the scope of maximum harmonization, applying it to more provisions that regulate the core aspects of the due diligence process.
- Simplified Definition of Stakeholder: The definition of “stakeholder” is proposed to be simplified, focusing on workers, their representatives, and individuals or communities directly affected by the company’s actions.
- No Requirement for Transition Plan: One proposed change is the removal of the requirement for companies to implement a transition plan for climate change mitigation, which could reduce reporting complexity.
- Changes to Penalties: The proposal includes a new approach to penalties, aimed at ensuring a fair and consistent application of fines and sanctions across EU member states.
- Civil Liability Changes: The proposal suggests removing the specific EU-wide civil liability regime and eliminating the requirement for member states to allow civil society organizations to represent victims in court.
- Extended Deadline for Guidelines: The deadline for issuing guidelines on how companies should conduct due diligence is proposed to be extended by six months, providing businesses with more time to understand and comply with the new requirements.
- Value Chain Due Diligence Limited to Tier 1 Suppliers: The proposal narrows the scope of due diligence by focusing on direct (tier 1) suppliers and business partners. This means companies are mainly responsible for assessing and addressing any adverse impacts within their own operations, subsidiaries, and direct relationships, rather than further down the supply chain.
Carbon Border Adjustment Mechanism (CBAM)
In addition to the adjustments in CSRD,CSDD and the EU Taxonomy, there are proposals aimed at simplifying the Carbon Border Adjustment Mechanism (CBAM) as a part of the Omnibus Simplification Package.
- De Minimis Threshold for Small Importers: A new de minimis threshold is being considered to exempt small importers from CBAM obligations. This includes an exemption of importers handling fewer than 50 tonnes of imports annually in key sectors (aluminium, cement, fertilizers, iron and steel).
- Simplifications for Large CBAM Importers: Several adjustments are being proposed to ease the process for large CBAM importers including:
- Making the consultation step in the authorization optional.
- Allowing authorized declarants to delegate CBAM declarations to third parties, such as consultants or environmental experts.
- Excluding non-calcined kaolinic clays from the scope of CBAM.
- Adjusting data collection methods to simplify compliance.
- Considering only direct emissions from electricity use in CBAM calculations.
- Aligning annual deadlines for various CBAM activities to simplify the process
- First-Year Flexibility: Instead of being required to purchase CBAM certificates by the end of 2026, it is being suggested that importers would be allowed to start purchasing them in February 2027, giving them more time to adjust.
- CBAM Certificate Management: The proposal suggests revising the ‘80% rule’ for CBAM certificate management, which currently requires importers to hold certificates for 80% of their carbon emissions, to a ‘50% rule, meaning importers would only need to hold certificates for 50% of their carbon emissions.
